Listed outsourcing company Business Connexion (BCX) had “limited success with tender opportunities, particularly in the public sector” in the first half of the year.
The company this morning published its results for the six months to February, and said revenue dropped to R1.88 billion, from R2 billion a year ago. Its operating profit margin dropped from 6.1% to 2.1%, because of the lower revenue and a loss from its technology division, where margins are under pressure.
BCX has set itself the target of reaching 8% in operating profit margin for the full-year. However, CEO Benjamin Mophatlane previously conceded this will be a challenging target.
“Management expects a recovery in margins from existing operations and a further enhancement from strategic growth initiatives,” the company says. Its gross margin was stable, coming in at 28.8%, compared with 29.4% a year ago.
The group generated diluted earnings per share of 9.3c, down from last year's 27.8c. Diluted headline earnings per share also dropped to 9.3c, from 27.3c a year ago. BCX says although the results are below its expectations, its underlying businesses are profitable and cash-generative.
Strong base
It says its diversity and strong balance sheet “provide a solid platform from which the group can seek out further opportunities for acquisitions and grow its service offering and market share”.
secured a R250 million medium-term loan facility for potential acquisition opportunities. It ended the period with R174 million in the bank, down from last year's R266 million.
However, BCX invested in cloud computing software and infrastructure and office space improvements during the half-year. It says cloud computing is still an “exciting driver” in the services division, which continues to be its biggest unit with revenue of R887.1 million, although this is a decline on last year's R947.8 million.
The technology division achieved revenue of R602 million, down from R720.5 million a year ago as approved orders of R128.5 million couldn't be accounted for because there were supply chain issues in getting the equipment into SA.
BCX's innovation division grew revenue to R214 million, from R188.8 million, as all its units showed growth year-on-year. All countries in its international division are profitable, it says.
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